Government Executive Magazine - 9/8/00 Postal officials defend move into e-commerce

Postal Service officials told members of a Senate panel Thursday that the agency intends to expand on its efforts to move into the online world. But critics questioned whether USPS should be allowed to compete against private firms in the e-commerce arena.

USPS is moving into three areas: messaging, merchandise and money. The service has already launched efforts to provide e-mail services, sell postage online and facilitate electronic bill payments.

At the hearing, Deputy Postmaster General John Nolan defended the agency's leap into e-commerce, citing customer demand and the digital divide as key reasons for expanding the agency's core services.

"In a period of such a big economic boom, our growth rate is not reflective," Nolan told Sen. Thad Cochran, R-Miss., chairman of the Governmental Affairs Subcommittee on International Security, Proliferation and Federal Services. "Without the opportunity to ... offer new products ... we're going to have a rate structure that the customer can't bear."

With plans to cut its workforce over the next four years by about 9,000 jobs as part of an initiative to save $4 billion, USPS is searching for ways to increase revenues. Agency officials think Internet user charges and licensing fees may be the answer. Current negotiations with Federal Express Corp. to move priority and express mail around the world also resulted from belt-tightening measures.

"E-mail, Internet banking and bill payment, and electronic catalogs and merchandising are directly competitive with the mail," said Robert Rider, vice chairman of the Postal Service's Board of Governors. "We don't know how fast or how much that the Internet will affect the Postal Service's business model. What's clear is that the stakes are high and we cannot wait to be certain before we act."

But for naysayers, the central issue is whether USPS should be offering new commercial products and services. Technology industry leaders claim the Postal Service's e-commerce initiatives are anti-competitive and secretive. In his testimony before the subcommittee, Ed Gleiman, chairman of the Postal Rate Commission, sided with the technology industry.

"Postal rates are likely to go up whether the Postal Service is involved in e-commerce or not," Gleiman said. "You really have to look at the hard numbers; the bottom line is the bottom line."